Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a notified amount of Rs 15,000 crore. The auction, price-based using a multiple price method, will be conducted by the RBI in Mumbai. Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system on June 03, 2016. Payment by successful bidders is due on June 06, 2016.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued for a total notified amount of Rs 15,000 crore.
* Securities include: 7.68 GS 2023, 7.59 GS 2026, 7.73 GS 2034 and 8.13 GS 2045.
* The auction is price-based using a multiple price method.
Bidding Process:
* Minimum investment is Rs 10,000 nominal and in multiples thereof.
* Up to 5% of the notified amount will be allotted to eligible individuals and institutions via a non-competitive bidding facility.
* Competitive and non-competitive bids must be submitted electronically via the RBI e-Kuber system. Physical bids are generally not accepted.
* Non-competitive bids are due between 10:30 a.m. and 11:30 a.m. on June 03, 2016.
* Competitive bids are due between 10:30 a.m. and 12:00 noon on June 03, 2016.
* The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of the auction.
* RBI has the discretion to accept or reject any bids.
Settlement and Other Details:
* Auction results will be announced on June 03, 2016.
* Payment by successful bidders is due on June 06, 2016.
* Securities will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* Stocks mature on December 15, 2023; January 11, 2026; December 19, 2034; June 22, 2045 respectively.
* The Stocks will qualify for the ready forward facility.
* The Stocks will be eligible for When Issued trading between May 31, 2016 and June 03, 2016.
Impact Analysis:
Scheduled Commercial Banks / State Cooperative Banks / Scheduled Primary Urban Cooperative Banks / Financial Institutions / Primary Dealers:
* Impact: Can participate in the auction of Government of India dated securities. They can also submit non-competitive bids on behalf of their constituents.
* Action Required: Submit competitive and/or non-competitive bids electronically via the RBI e-Kuber system by the specified deadlines. Ensure constituents are aware of the auction details and bidding process.
Eligible Individuals and Institutions (under Non-Competitive Bidding Scheme):
* Impact: Can participate in the auction through the non-competitive bidding facility, allowing them to acquire government securities.
* Action Required: Submit firm orders to their bank or PD to place a consolidated non-competitive bid on their behalf.
Investors:
* Impact: Can invest in Government of India dated securities, with returns paid half-yearly and repayment at par on the specified maturity dates.
* Action Required: Submit bids electronically through the Reserve Bank of India Core Banking Solution EKuber system.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions.
Government of India: The issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: Entities eligible to participate in the auction.
All State Cooperative Banks: Entities eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: Entities eligible to participate in the auction.
All Financial Institutions: Entities eligible to participate in the auction.
All Primary Dealers: Entities eligible to participate in the auction.
Mumbai, Maharashtra: Location where the Reserve Bank of India will conduct the auctions.
RBI/2015-16/415
Ref. No. IDMD/2719/08.02.032/2015-16 May 30, 2016
All Scheduled Commercial Banks
All State Co-operative Banks/All Scheduled Primary
(Urban) Co-operative Banks /All Financial Institutions/
All Primary Dealers.
Dear Sir/Madam,
Auction of Government of India Dated Securities
Government of India has offered to sell (re-issue) four dated securities for notified amount of Rs
15,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Date Settlement
No Amount date
(in Rs crore)
4(3)-W&M/2016 dated
1 7.68% GS 2023 3,000
May 30, 2016
4(3)-W&M/2016 (i)dated
2 7.59% GS 2026 8,000
May 30, 2016
June 03, 2016 June 06, 2016
4(3)-W&M/2016(ii) dated (Friday) (Monday)
3 7.73% GS 2034 2,000
May 30, 2016
4(2)-W&M/2016(iii)
4 8.13% GS 2045 2,000
dated May 30, 2016
The auction for securities will be price based using multiple price method. The Reserve Bank of
India at Mumbai will conduct the auctions. The salient features of the auctions and the terms
and conditions governing the issue of the Stocks are given in the notifications (copies enclosed),
which should be read along with the General Notification F. No. 4 (13)–W&M/2008, dated
October 8, 2008 issued by Government of India.
2. We wish to draw your attention, in particular, to the following:
(i) The Stocks will be issued for a minimum amount of Rs.10,000/- (nominal) and in multiples
of Rs 10,000/- thereafter.
(ii) In all the auctions, Government Stock up to 5% of the notified amount of sale will be
allotted to the eligible individuals and institutions under the Scheme for Non-competitive
Bidding Facility in the Auctions of Government Securities. Each bank or PD on the basis of firmorders received from their constituents will submit a single consolidated non-competitive bid on
behalf of all its constituents in electronic format on the Reserve Bank of India Core Banking
Solution (E-Kuber) system. Allotment under the non-competitive segment to the bank or PD
will be at the weighted average rate of yield/price that will emerge in the auction on the basis of
the competitive bidding.
(iii) Both competitive and non-competitive bids for the auction should be submitted in
electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on June
03, 2016. Bids in physical form will not be accepted except in extraordinary circumstances. The
non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. and the competitive
bids should be submitted between 10.30 a.m. and 12.00 noon.
(iv) An investor can submit more than one competitive bid at different prices in electronic
format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. However,
the aggregate amount of bids submitted by a person in an auction should not exceed the notified
amount of auction.
(v) On the basis of bids received, the Reserve Bank will determine the minimum price up to
which tenders for purchase of Government Stock will be accepted at the auctions. Bids quoted at
rates lower than the minimum price determined by the Reserve Bank of India will be rejected.
Reserve Bank of India will have the full discretion to accept or reject any or all bids either wholly
or partially without assigning any reason.
(vi) The result of the auctions will be announced on June 03, 2016 and payment by successful
bidders will be on June 06, 2016 (Monday).
(vii) The Government Stocks will be issued by credit to Subsidiary General Ledger Account
(SGL) of parties maintaining such account with Reserve Bank of India or in the form of Stock
Certificate. Interest on the Government Stock will be paid half-yearly.
(viii) The Government Stocks will be repaid at par on December 15, 2023; January 11, 2026;
December 19, 2034; June 22, 2045 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period May 31, 2016– June
03, 2016 in accordance with guidelines on ‘When Issued’ transactions in Central Government
Securities issued by Reserve Bank of India vide circular No.RBI /2006-07/178 dated November
16, 2006 as amended from time to time.
Yours faithfully
(Chandan Kumar)
General Manager